The Stewart Title of California, Inc. Buyer s and Seller s Guide. Making Buying and Selling a Home Easy

Transcription

1 The Stewart Title of California, Inc. Buyer s and Seller s Guide Making Buying and Selling a Home Easy

2 Table of Contents Homeownership 4 The Closing Process 5 Home Buying 6 The Loan Process and Closing the Escrow 7 Property Taxes 8 Property Tax Calendar 9 Home Selling 10 Guide to Escrow 12 Who is Involved in the Escrow Process? 13 Life of an Escrow Northern CA 14 Life of an Escrow Southern CA 15 Title Insurance 16 Title Search 16 Homeowner s Title Policy Comparison Chart 18 Ways to Hold Title 21 Who Pays for What? 22 Glossary 24 Notes 26 Important Contact Information 27 2

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4 Homeownership The Stewart Title of California, Inc. Buyer s and Seller s Guide is designed to help homebuyers and sellers understand the process involved in making their transactions run smoothly. 4

5 The Closing Process Buyer begins the process to title and escrow Purchase agreement and amendments are signed Title and escrow are identified in the purchase agreement Purchase agreement accepted Order is opened with the escrow and title company Buyer deposits earnest money (if applicable) Buyer deposits money for down payment Escrow prepares and obtains signatures on escrow instructions and other pertinent documents Buyer obtains inspection and appraisal Title issues preliminary report Buyer obtains final loan approval Buyer obtains homeowners insurance Escrow begins the closing process Buyer (and seller if applicable) deposits funds for closing cost; seller executes transfer and deposits in escrow Buyer signs loan documents typically through escrow Escrow records documents Escrow closes; transaction is complete The buyer is now a proud homeowner 5

6 Home Buying Purchase Agreement (including any counter offers) A real estate professional will draft a purchase agreement incorporating customary practices, local regulations and appropriate contingencies. In the purchase agreement, the buyer will select the title and escrow company; Stewart Title looks forward to supplying those services. Typically a purchase agreement is submitted with an earnest money deposit, ranging from 1% to 3% of the purchase price. The real estate professional presents the purchase agreement to the seller s real estate professional; the seller accepts, counters or rejects the offer. Opening Escrow Once the purchase agreement is accepted and signed by all parties, the buyer s real estate professional will open escrow. The earnest money will be deposited at this time and the escrow company will handle all funds associated with the transaction. Entering the Contingency Period This time period is specified in the purchase agreement and is used to obtain items identified as required for the transaction including obtaining the following: Physical inspection of property Property appraisal Preliminary report from the title company Loan approval Property pest inspection Seller s transfer disclosure statement Satisfaction of any purchase contingencies Transaction specific requirements (see Purchase Agreement for details) Obtaining Homeowners Insurance In preparation for owning a home, the buyer must provide to escrow a homeowners insurance policy that is acceptable to the lender and in effect by the close of escrow. The buyer s real estate professional will work with the escrow company and insurance agent to ensure that the policy is in place. Depositing Funds for Down Payment and Closing Costs Any money deposited into escrow needs to be in the form of a cashier s check or wire transfer. With regards to deposit funds for down payment, the purchase agreement dictates the money needed to be deposited into escrow. With regards to closing costs; the escrow company will provide a statement of estimated closing costs that shows the required amount. Signing Loan Documents Before escrow can close, the buyer will review and sign all loan documents from the lender. This is often done at an appointment set up with the escrow company. Closing Escrow When all conditions of the purchase agreement have been satisfied, the buyer will sign all the closing documents. After the buyer deposits the balance of the down payment and closing costs with the escrow company, and the lender has approved their final loan documents, the lender will deposit the loan funds. Next, the county recorder s office will record the transaction documents, and escrow will handle distribution of funds. Now, the buyer will be the proud new homeowner! 6

7 The Loan Process and Closing the Escrow The Application After completing the loan application and providing all pertinent documentation to the lender, the buyer will receive loan approval generally within 24 to 72 hours. Loan Submission The lender may have requested other items, including: A credit report to showing credit history An appraisal on the property, once in escrow A preliminary report Loan Documents Sent to the Escrow Company Typically within one to three days after the loan approval is issued, the loan documents including the note and deed of trust are completed and sent to the escrow company. The escrow company will then make an appointment for the buyer to sign all final loan and escrow documents. Funding Once all the parties have signed the loan documents, the documents are returned to the lender, who reviews the package. When the loan documents pass final review, the loan funds are deposited by wire transfer with the escrow company. Recording the Deed of Trust When the escrow company receives funds from the lender, the transaction documents including the deed of trust, are recorded at the county recorder s office, and escrow is now officially closed. 7

8 Property Taxes Property Tax Defined Local governments, usually at the county level, administer property tax. Tax rates vary from county to county and are based on a predetermined percentage of the assessed value of each individual property. Property taxes are paid in two installments each year. Property Tax and Escrow Payment of property taxes for closing escrow varies depending upon when the buyer closes escrow. If the buyer s home is in escrow right after a deadline for submitting a tax payment, the real estate professional should request proof of that payment from the seller. The preliminary report may show that property taxes are still due because it can take up to six weeks or more for a property tax payment to post on the records; proof of payment will address this issue. Property Tax Payment The escrow company identifies how property taxes are to be paid at the close of escrow. During the buyer s discussion with the lender, the buyer will either opt to pay the property tax and insurance costs on a monthly basis (called an impound account) or pay them directly when due. The initial impound account payment is collected through the escrow and then monthly by the lender with the mortgage, principal and interest payment. The lender pays the tax collector and the insurance company directly from this account when the property tax installments and insurance premiums are due. Supplemental Tax The new homeowner may receive a supplemental property tax bill after the close of escrow; this supplemental tax is not and cannot be collected for through escrow. Most property taxes are based on the assessed value of a home at the time of purchase. Typically when there is a change of ownership, a supplemental assessment occurs. A new assessed value for the home may lead to an increase in the tax amount. To address any potential increase, the tax assessor may mail the supplemental tax bill requiring payment for the difference. The supplemental bill is typically issued within six months after the close of escrow. Even if the buyer has an impound account with their lender to pay taxes and insurance on a monthly basis, the supplemental tax bill is sent directly to the buyer by the tax collector rather than to the lender and must be adhered to and paid. 8

9 Property Tax Calendar The following is an annual calendar with some important property tax information and deadlines. January Jan. 1: Tax assessment date February Feb. 1: Second tax installment due Feb. 10: Last day to file homeowner s, veteran s and senior citizen s exemptions 100% MARCH Mar. 1: Taxes due on unsecured roll APRIL Apr. 10*: Second tax installment is considered delinquent after 5 p.m. (Add 10% penalty plus an additional fee set by county); penalty and fee valid from April 10 to June 30 May JUNE JULY (New Fiscal Year) Jul. 1: If one or both tax installments still delinquent: add 10% penalty, $15 fee, plus additional 1.5% per month Jul. 1: Homeowners informed of new property values AUGUST SEPTEMBER OCTOBER NOVEMBER Nov. 1: First tax installment due DECEMBER Dec. 1: Last day to file homeowner s, veteran s and senior citizen s exemption up to 80% Dec. 10*: First tax installment is considered delinquent after 5 p.m. (Add 10% penalty plus an additional fee set by county) *Important: Mail your property tax payments early to make sure that the envelope is postmarked on or before the December 10 and April 10 delinquency dates. 9

10 Home Selling Making the decision to sell a home is personal. Whether relocating, moving to accommodate a growing family or simplifying life for retirement, selling is an involved process that takes careful planning. Stewart Title looks forward to handling your seller s needs. Reviewing the Buyer s Purchase Offer Once an offer is made, the real estate professional will review the offer with the seller and help prepare a response to that offer. Presenting the Purchase Offer Response The seller may accept, counter or reject the purchase offer. This process may take anywhere from a few days to a few weeks, depending on the time deadlines specified in the response to the parties submissions. Opening Escrow Escrow is opened and the buyer s earnest money is deposited. The escrow company will handle all funds associated with the transaction. 10

11 Entering the Contingency Period This time period is specified in the purchase agreement. During this time, the buyer works to satisfy contingencies to the purchase agreement, such as obtaining a property inspection and an appraisal. The seller will work with the real estate professional to ensure that all of the transaction documents are completed and provided to the buyer for review. Transaction documents may include: Real estate transfer disclosure statement Physical inspection of property Property pest inspection Other disclosure forms Closing Escrow When all conditions of the purchase agreement have been satisfied, the seller will execute all the required closing and transfer documents. The transaction is completed when the buyer s lender funds the loan, the transaction documents are recorded with the county, and the existing mortgage on the home is paid off. 11

12 Guide to Escrow After a purchase agreement has been signed, the escrow company steps in as a neutral third party to process and oversee the money and documents involved in transferring ownership. The escrow company works with the buyer and seller throughout the closing process to ensure that the transaction runs smoothly. Opening Escrow The real estate company will open escrow for the transaction as soon as the buyer and seller have signed the purchase agreement. The buyer and seller will sign escrow instructions, which list the contingencies from the purchase agreement and any other requirements for escrow to close. Initial Paperwork The escrow company will require a completed statement of identity form. The statement of identity form is used to eliminate judgments, bankruptcies and liens that may be filed against persons with similar names to the buyer or seller. The Escrow Company s Role While the transaction is in escrow, the escrow company will do the following: Order demands and other documents and information required for closing Contact the buyer s lender to coordinate loan funding Coordinate payoff of the seller s mortgage Forward the deed and other transaction related documents to the county recorder for recording Handle final accounting and disbursement of any remaining funds to all parties Issue a final closing statement (HUD-1) Funding the Transaction In most transactions, the buyer will deposit a down payment and the seller will deposit the deed and other necessary documents with the escrow company. Prior to close of escrow, the buyer deposits the balance of required funds with the escrow company and the lender funds the loan. Closing Escrow The length of the escrow period may range from a few days to several months. The buyer, seller and real estate professionals will work together to determine the best time frame. The time frame will be specified in the terms of the purchase agreement. Escrow will be complete after all parties have signed the escrow and closing documents, all contingencies in the purchase agreement have been satisfied and removed, all monies required for closing (including lender s funds) have been deposited into escrow, the transaction documents have been recorded in the county and all funds have been disbursed. The recording of the documents signifies legal transfer of title from the seller to the buyer, at which time escrow closes. The buyer then receives the keys to their home. 12

13 Who is Involved in the Escrow Process? Seller Seller s Real Estate Professional The Escrow Company (neutral third party) Buyer Buyer s Lender Buyer s Real Estate Professional 13

14 Life of an Escrow Northern CA Purchase agreement sent to the escrow company Order preliminary report and collect deposit from buyer s real estate professional Escrow reviews purchase agreement and preliminary report is completed Discuss purchase agreement terms with real estate professional, prepare and send for execution the statement of information and seller information forms Order demands Enter all information into HUD including payoffs, inspection fees due, commissions, etc. Prepare estimated closing statement for seller, buyer and the lender Receive loan docs from lender and finalize numbers on estimates Prepare escrow documents for signature including escrow instructions Schedule signing for buyer and seller Forward signed loan package to lender for review Obtain buyer s funds and lender s loan funds Forward recordable documents to county for recording Close file after recording is confirmed Disburse funds and issue final HUD-1s, 1099s, commissions package, etc., to all parties 14

15 Life of an Escrow Southern CA Purchase agreement sent to the escrow company Prepare and obtain signatures on escrow instructions and other pertinent documents Preliminary Report and Demands Order preliminary report Receive and review preliminary report and have buyer/borrower approve Request beneficiary statement IF seller s loan is to be assumed or taken subject to (buyer/seller needs to confirm that loan can be assumed) Request demands (if seller s loan is to be paid off). Request clarification of other liens (if any) and review taxes on preliminary report Receive and process demands Have buyer/seller approve demands Forward demands on to title company Process Financing Review terms of transfer and current payment status; have beneficiary statement approved by buyer/seller Send certified copy of escrow instructions and preliminary report to lender Receive loan approval and prepare lender rate, terms and amendments Request loan documents Arrange for loan documents to be signed and notarized Review file and confirm that all conditions have been met and that all loan documents are available for signing; this includes termite inspection completed, contingencies released, homeowners insurance secured, and any additional documents have been prepared and received Prepare estimated figures and obtain signatures on estimated closing statements and all remaining documents/instructions from buyer and seller Forward documents on to title company Obtain funds from buyer Return loan document Request loan funds Receive loan funds Order recording Close file, prepare statements and disburse funds Complete closing, forward final documents to all interested parties 15

16 Title Insurance When purchasing a home, the buyer acquires title to the property. This title includes the right of ownership and possession of the land. Sometimes, however, the buyer s rights to the property may be limited by claims asserted by others. These potential claims, if not caught and corrected before buying, may limit title to the property, have a negative impact on the value of the home and threaten the interest that the homeowner and mortgage lender hold in the property. Acquiring Title Insurance Title insurance is a welcomed security blanket for homeownership because of the significant investment the homeowner makes when buying a home. Purchased as a one-time expense, title insurance covers against loss due to potential preexisting liens and hazards that may not be uncovered in a general title search. The Importance of a Title Search Despite the expertise and dedication that go into a title search, hidden title defects can emerge after completion of a real estate transaction, leaving the buyer without clear title. Title defects can be an unpleasant and costly surprise. Some examples include: Previously undisclosed heirs with claims against the property A forged deed that doesn t transfer title to real estate Instruments executed under expired or fabricated power of attorney Mistakes made in public records Title insurance, through a company like Stewart Title, is a simple step buyers can take to protect themselves against loss or damage due to potential problems with the title to their property. Title Search Researching a Title Stewart Title of California, Inc., the title company/title agent issuing a title insurance policy through title insurance company Stewart Title Guaranty Company, will perform a title search before issuing a title insurance policy. This labor-intensive process searches the history of public records of the property (It s not uncommon to find liens on properties that date back over 100 years!) The search results may uncover items that need to be corrected before a clear title can be conveyed, such as: Outstanding mortgages, liens, judgments and tax liens Deeds, wills and trusts that contain improper vesting and incorrect names Improper notary acknowledgements Easements and restrictions The title company will issue a preliminary report on the property. A preliminary report gives the buyer, seller and lender an opportunity to review any potential title defects that are to be cured or shown on the title policy. 16

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18 Homeowner s Title Policy Comparison Chart Stewart Title offers its residential customers two levels of coverage protection. The standard homeowner s policy covers the insured for defects and liens in the history of the title through the date and time the new transaction deed is recorded in the public records. The ALTA Homeowner s policy provides enhanced coverage, protecting title from additional risks, including some that might occur after the deed is recorded. The following is a comparison of the two title insurance policy products: Head-to-head coverage comparison Covered Risks Owner s Policy (2006) Homeowner s Policy ( ) Third party claims an interest in the title Prior forgery, fraud or duress affecting the title Liens or encumbrances on the title (e.g., prior mortgage or deed of trust, state or federal tax lien, condominium or homeowners association lien) Improperly executed documents Defective recording of documents Unmarketability of the title Lack of a right of legal access to and from the land Gap Coverage (extending coverage from the closing to the recording of the deed) Duration Coverage continues as long as you own the property Policy insures anyone who inherits the property from you Policy insures the trustee of an estate-planning trust Policy insures the beneficiaries of a trust upon your death Extended Coverage Parties in possession of the property that are not disclosed by the public records (e.g., tenants, adverse possessors) * Unrecorded easements (e.g., prescriptive easements) affecting the property * Encroachments and boundary line disputes that would be disclosed by a survey * Mechanic s liens (a lien against the property due to non-payment of work) * Taxes or special assessments that are not shown as liens by the public records * Additional Coverages Actual vehicular and pedestrian access, based upon a legal right If you must correct or remove an existing violation of certain covenants, conditions or restrictions 18

19 Coverages Included Without Endorsement Owner s Policy (2006) Homeowner s Policy ( ) Loss of your title resulting from a prior violation of a covenant, condition or restriction Up to $10,000 if you are unable to obtain a building permit due to an existing violation of a subdivision law or regulation or you must correct an existing violation (subject to a deductible) Up to $25,000 if you must remedy or remove an existing structure because it was built without a proper building permit (subject to a deductible) Up to $25,000 if you must remedy or remove an existing structure due to an existing violation of a zoning law or zoning regulation (subject to a deductible) Up to $5,000 if you must remove your existing structures if they encroach onto your neighbor s land (subject to a deductible) If you are prohibited from using the land as a single-family residence because such use violates an existing zoning law or zoning regulation If you are forced to remove your existing structures because they encroach into an easement or over a setback line Damage to existing structures due to an exercise of an existing right to use any easement affecting the land Damage to existing improvements due to an exercise of an existing right to use the surface of the land for the extraction or development of minerals, water or any other substance Attempted enforcement of discriminatory covenant Supplemental taxes because of prior construction or change of ownership or use Damages if the residence is not located at the address stated in the policy Pays substitute rent and relocation expenses, if you cannot use your home because of a claim covered by the policy Automatic increase in policy amount up to 150% of policy amount over five years Post Policy Coverages Forgery affecting the title Unauthorized leases, contracts or options Ownership claims Easements or restrictions affecting your use of the land Encroachment of neighbor s buildings onto your land *Not automatically included in the basic policy, but may be available by extended coverage and/or endorsements. Both policies contain certain stipulations and conditions as set out by Stewart Title Guaranty Company (the insurer of title insurance policies issued by Stewart Title) and the American Land Title Association. If you have questions regarding your legal rights under the various policies, we suggest that you contact your attorney. 19

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21 Ways to Hold Title The following is a chart identifying possible ways for two or more individuals to hold title to real property in California. The information concerning ownership vesting is for informational purposes only. Contact an attorney or CPA if you desire advice regarding a specific manner of holding title to property. Parties Division Title Possession Tenancy in Common Joint Tenancy Community Property Any number of persons (including married or registered domestic partners). Ownership can be divided into any number of interests; equal or unequal. Co-owners must acquire interests at the same time, through the same deed and from the same person (but may create joint tenancy by deed from sole owner to sole owner and others). Title must expressly state joint tenancy and ideally should state with right of survivorship. Equal rights of possession. Any number of persons (including married or registered domestic partners). Ownership can be divided into any number of interests; all must be equal. Co-owners must acquire interest at the same time and from the same person (may be created by deed from a sole owner to self and to others). Equal rights of possession. Only married couples or registered domestic partners have community property rights. Ownership and managerial interests are equal. Title is in the community. Each interest is separate but management is unified. Equal rights of possession. Community Property With Right of Survivorship Only married couples or registered domestic partners have community property rights. Ownership and managerial interests are equal. Title is in the community. Each interest is separate, but management is unified. Title must expressly state community property with right of survivorship. Equal rights of possession. Conveyance Each co-owner s interest may be conveyed separately by its individual owner. Conveyance by one co-owner without the others will sever (terminate) the individual s joint tenancy. Conveyance requires both party signatures. If one party conveys alone, the other spouse or domestic partner must consent. Conveyance requires both party signatures. If one party conveys alone, the other spouse or domestic partner must consent. Death Upon co-owner s death, his or her interest passes to that person s devisees or heirs. No survivorship right. Upon co-owner s death, his or her interest ends and cannot be transferred or disposed of by will or inheritance. Remaining joint tenants own the property and the decedent s interests ends equally. An Affidavit may establish fact of death. Upon death of spouse or registered domestic partner, 50% remains with the surviving spouse or registered domestic partner. The decedent s 50% goes to his or her estate which may go to the surviving spouse or registered domestic partner or may otherwise be disposed of by will. Upon death of spouse or registered domestic partner, his or her interests ends and cannot be otherwise disposed of. Surviving spouse or registered domestic partner owns the property 100%. An affidavit may establish fact of death. Successor s Status Devisees or heirs become tenants in common. Last survivor owns property 100%. Depends on decedent s will or rules of inheritance; when passing by will tenancy in common between devisees and surviving spouse or domestic partner results. Surviving spouse or domestic partner owns property 100%. Presumption In most cases, tenancy in common is the default legal presumption of how title is held. (Except in married couples or registered domestic partner cases) Presumption against joint tenancy must expressly state joint tenancy with right of survivorship in the deed The legal presumption is that the property, which has been acquired during the course of the marriage or registered domestic partnership is community property without right of survivorship. Presumption is against right of survivorship; must expressly state community property with right of survivorship in the deed. 21

22 Who Pays for What? The following is a list of customary and typical practices by county on what the buyer and seller pays when it comes to escrow and title fees and transfer taxes. County Escrow Charges Title Fees (Owner s Policy) County Transfer Tax (Per Thousand) City Transfer Tax (Per Thousand) Alameda Buyer pays Buyer pays Seller pays $1.10 (Except in the city of Alameda 50/50) 50/50* Alameda $12.00 Albany $11.50 Berkeley $15.00 Hayward $4.50 Oakland $15.00 Piedmont $13.00 San Leandro $6.00 Alpine (Calaveras Side) 50/50 50/50 Seller pays $1.10 None Alpine (El Dorado Side) 50/50 Buyer pays Seller pays $1.10 None Amador 50/50 Buyer pays 50/50 $1.10 None Butte (Chico & Oroville) 50/50 50/50 Seller pays $1.10 None Butte (Paradise) 50/50 50/50 Seller pays $1.10 None Calaveras (Bear Valley) 50/50 Buyer pays Seller pays $1.10 None Calaveras (San Andreas) 50/50 50/50 Seller pays $1.10 None Colusa 50/50 50/50 Seller pays $1.10 None Contra Costa Buyer pays Buyer pays Seller pays $ /50 Richmond $7.00 Del Norte 50/50 Seller pays Seller pays $1.10 None El Dorado 50/50 50/50 Seller pays $1.10 None Fresno 50/50 Seller pays Seller pays $1.10 None Glenn 50/50 50/50 Seller pays $1.10 None Humboldt 50/50 Seller pays Seller pays $1.10 None Imperrial 50/50 Seller pays Seller pays $1.10 None Inyo 50/50 Seller pays Seller pays $1.10 None Kern 50/50 Seller pays Seller pays $1.10 None Kings 50/50 Seller pays Seller pays $1.10 None Lake Buyer pays Buyer pays Seller pays $1.10 None Lassen 50/50 50/50 Seller pays $1.10 None Los Angeles 50/50 Seller pays Seller pays $1.10 Seller pays Culver City $4.50 Los Angeles $4.50 Pomona $2.20 Redondo Beach $2.20 Santa Monica $3.00 Madera 50/50 Seller pays Seller pays $1.10 None Marin Buyer pays Buyer pays Seller pays $1.10 Seller pays San Rafael $2.00 Mariposa 50/50 50/50 Seller pays $1.10 None Mendocino Buyer pays Buyer pays Seller pays $1.10 None Merced 50/50 50/50 Seller pays $1.10 None Modoc 50/50 50/50 Seller pays $1.10 None Mono 50/50 Seller pays Seller pays $1.10 None Monterey (Salinas) 50/50 Seller pays Seller pays $1.10 None Monterey (Peninsula) Seller pays 50/50 Seller pays $1.10 None Napa Buyer pays Buyer pays Seller pays $1.10 None 22

23 County Escrow Charges Title Fees (Owner s Policy) County Transfer Tax (Per Thousand) City Transfer Tax (Per Thousand) Nevada 50/50 Buyer pays Seller pays $1.10 None Orange 50/50* Seller pays Seller pays $1.10 None Placer 50/50 Seller pays Seller pays $1.10 None Plumas 50/50 50/50 Seller pays $1.10 None Riverside 50/50 Seller pays Seller pays $1.10 Riverside $1.10 City of Riverside $1.10 Sacramento Seller pays Seller pays Seller pays $ /50 Sacramento $2.75 San Benito Seller pays Seller pays Seller pays $1.10 None San Bernardino 50/50 Seller pays Seller pays $1.10 None San Diego 50/50 Seller pays owner s Seller pays $1.10 None Buyer pays lender s San Francisco Buyer pays Buyer pays Seller pays n/a Seller pays $100 - $250 $5.00 $250,001 - $999,999 $6.80 $1,000,000 - $4,999,999 $7.50 $5,000,000 - $9,999,999 $20.00 $10,000,000 - up $25.00 San Joaquin 50/50 50/50 Seller pays $1.10 None San Luis Obispo 50/50 Seller pays Seller pays $1.10 None San Mateo Buyer pays Buyer pays Seller pays $ /50 San Mateo $5.00 Santa Barbara 50/50 Seller pays Seller pays $1.10 None Santa Clara Seller pays Seller pays Seller pays $ /50 Mountain View $3.30 Palo Alto $3.30 San Jose $3.30 Santa Cruz 50/50 50/50 Seller pays $1.10 None Shasta 50/50 50/50 Seller pays $1.10 None Sierra 50/50 Seller pays Seller pays $1.10 None Siskiyou 50/50 50/50 Seller pays $1.10 None Solano Buyer pays Buyer pays Seller pays $1.10 Seller pays Vallejo $3.30 Sonoma Buyer pays Buyer pays Seller pays $1.10 Seller pays Cloverdale $1.10 Cotati $1.90 Petaluma $2.00 Santa Rosa $2.00 Sebastopol $2.00 Stanislaus Modesto (City) Patterson (City) 50/50 50/50 or as negotiated 50/50 or as negotiated 50/50 Seller pays or as negotiated 50/50 or as negotiated Seller pays $1.10 Seller pays $1.10 Seller pays $ None None None Sutter Seller pays Seller pays Seller pays $1.10 None Tehama 50/50 50/50 Seller pays $1.10 None Trinity 50/50 50/50 Seller pays $1.10 None Tulare 50/50 Seller pays Seller pays $1.10 None Tuolumne 50/50 50/50 Seller pays $1.10 None Ventura 50/50 Seller pays Seller pays $1.10 None Yolo (Davis) 50/50 50/50 Seller pays $1.10 None Yolo (Woodland) 50/50 50/50 Seller pays $ /50 Woodland $1.10 Yuba Seller pays Seller pays Seller pays $1.10 None *50/50 = Buyer Pays 50%, Seller Pays 50%. Please note: The information and rates supplied are provided for informational purposes only, and are subject to change and must be verified with the appropriate governmental agency at the time of purchase or sale to ensure accuracy. Stewart Title is not responsible for the accuracy of this information.

24 Glossary Appraisal An expert judgment or estimate of the quality or value of real estate as of a given date. Often a purchase agreement contingency to be cleared for close of escrow. CC&R Covenants, conditions and restrictions. A document that controls the use, requirements and restrictions of a property. Certificate of Title Legal proof of ownership of a property carrying the owner s name and other information. Closing Costs Necessary expenses accrued during the course of a real estate transaction, such as loan fees, title fees, appraisal fees, escrow fees, etc. and all other costs related to closing the transaction. These costs are itemized in the closing statement. Closing Statement The statements provided by the escrow company that accounts for all of the funds received and due and disbursed for at the closing, including deposits for taxes and homeowners insurance. The typical form used for the closing statement is called the HUD-1. Credit Report A report on the past ability of a loan applicant to pay installments in a timely manner. Often a lender requirement for loan approval. Commission Paid to Real Estate Professional Fee payable by seller to the real estate professionals for buying or selling the property; usually a percentage of the sales price. Covenant Conditions affecting the use of land or property written into the title. Deed Written instrument which, when properly executed and delivered, transfers and conveys title. Earnest Money A portion of money provided to the seller or escrow company by the buyer with a written purchase offer. Earnest money is intented as evidence of the buyer s good faith. It is deposited with the escrow company once the purchase agreement is executed, and is applied towards the purchase price of the home. Easement A right or privilege of use over the property of another. Rights of access others have over your property such as a shared driveway or a local gas and electric company. Encroachment When part of one property encroaches upon an adjoining property. For example, when a building hangs over an adjoining property or when a fence is constructed on either side rather than along the dividing property line. Encumbrance An easement, mortgage or other liability on a property which impedes its use or transfer. Escrow Company A neutral third party whereby both parties to a purchase agreement deposit money and documents temporarily. The escrow company handles all of the documents and distribution of funds. Homeowners Association An association of homeowners in a given area, or the builder of condominiums or planned developments formed for the purpose of improving or maintaining the common areas. Homeowners Insurance Protects the property and contents in case of damage or loss; typically must be for at least the loan amount or for 80% of the value of the improvements, whichever is greater. The lender must review and approve prior to close of escrow. 24

25 Impound Account Account held by lender for payment of taxes and insurance. For example, the buyer pays a portion of the yearly taxes with each monthly payment. The lender pays the tax bill from the accumulated funds. Interim Binder A binding promise between the title company and the buyer, allowing the buyer to resell the same property within a three (3) year period and obtain a new title insurance policy at a fraction of the cost. Inspections A visual examination of the structure and systems of a building. The inspection report will describe the building s condition and indicate which items will be in need of repairs or replacement. Various inspections are often purchase agreement contingencies to be cleared for close of escrow. Lien An interest claimed by one person on the property of another as security for money owed. Such claims may include obligations not met or satisfied, judgments, unpaid taxes, materials or labor. Loan Discount The points a lender charges; may be paid by either buyer or seller on conventional loans as dictated in the purchase agreement; number of points fluctuates with mortgage market; part of the buyer s closing costs. Mortgagee s Title Policy Required by the lender to insure that the lender has a valid lien; this does not protect the buyer. Offer to Purchase A formal legal agreement which offers a particular price for a specified property. The offer may be firm (no conditions attached) or conditional (certain conditions apply). Origination Fee A fee the buyer pays the lender to originate a new loan; part of buyer s closing costs. Owner s Title Policy This policy insures the buyer against losses specifically related to property ownership or damage arising from various defects, liens or encumbrances not excepted from policy coverage. Physical Inspection Report A qualified inspector s report on a property s overall condition. The report usually includes an evaluation of both the structural and mechanical systems. Often a purchase agreement contingency to be cleared for close of escrow. Preliminary Report It is an offer to insure title, showing ownership, encumbrances and liens. Purchase Agreement A written document in which the buyer agrees to purchase certain real estate and the seller agrees to sell that real estate under the stated terms and conditions. Also called a sales contract, deposit receipt, earnest money contract or agreement for sale. This agreement is deposited with the escrow company upon opening escrow. Recording Fee Charged by the county clerk to record documents in the public records. Restriction A document that limits the right to real property. Statement of Identity Forms A form filled out by the buyer and seller to enable the escrow company to confirm the identity of the parties involved in a real estate transaction. Settlement/Closing: Completion of sale between seller and buyer; transfer documents are recorded; all funds are disbursed and the buyer is legally entitled to take possession of the property. Survey Confirms lot size and identifies any encroachments or restriction violations. 25

26 Tax Proration Allocation of taxes between the buyer and seller based upon the closing date. Title Defects Problems with the title to a property that may negatively impact ownership of and/or the value of the property. Examples of title defects include but are not limited to: previously undisclosed heirs with claims against the property; a forged deed that doesn t legally transfer title to real estate; or mistakes in the public records. Title Insurance Protects lenders and homeowners against loss or damage due to liens, defects or encumbrances affecting title to the property. Title Search The process of examining public and title plant records concerning names of owners, taxes, liens, and encumbrances against the property in order to prepare and issue the preliminary report. Notes: 26

27 27 Important Contact Information Real Estate Professional Name Company Address City State/ZIP Work Cell Notes Title and Escrow Company Name Company Address City State/ZIP Work Cell Notes Contact Name Company Address City State/ZIP Work Cell Notes Contact Name Company Address City State/ZIP Work Cell Notes

28 Stewart Title of California, Inc. stewart.com Stewart Title Company is a subsidiary of Stewart Information Services Corporation Stewart. Trademarks are the property of their respective owners Post Oak Boulevard Houston, Texas (888) STEWART stewart.com STofCA /14